Volume 19 | Issue 23 | October 20- 26, 2006

State files appeal in Knickerbocker case

As expected, the state Attorney General Eliot Spitzer filed an appeal on Oct. 4 from a State Supreme Court decision that tenants of Knickerbocker Village on the Lower East Side had hoped would keep their apartments affordable.

Judge Walter B. Tolub had decided on Aug. 31 that the state Division of Housing and Community Renewal was wrong to approve the application by the owners of the 12-building complex to withdraw from a 1934 state low-income housing program and transfer it to private ownership.

Judge Tolub said in his decision that while D.H.C.R. has the authority under the program to dissolve the ownership corporation, “that does not mean that the D.H.C.R. may transfer the property to whomever it pleases.” Tolub said the agency lacks the authority to transfer the property “to anyone other than to a municipality or to another limited-dividend company.”

Both sides had said they would appeal if the decision went against them. The case will be argued at the Appellate Division in Manhattan later this month or in November.

Knickerbocker Village, Inc., owner of the 1,590-unit complex between the ramps of the Brooklyn and Manhattan Bridges, had petitioned the D.H.C.R. in 2003 for permission to dissolve and transfer the property to Cherry Green Corp., a new version of itself, and run it outside the state Article IV housing program that predates the Mitchell-Lama program. Article IV imposes rent limits and requires project supervision by D.H.C.R. Unlike Mitchell-Lama, there is no specific mechanism for a building owner to leave Article IV.

D.H.C.R. approved the application with the condition that rents for existing tenants would be subject to Rent Stabilization. Tenants, however, felt that the Article IV program gave them more rent protection than Rent Stabilization and sued the owner of the complex and D.H.C.R. to overturn the agency ruling.

--Albert Amateau

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